There are some tried and true methods if you're just starting out to construct your credit. It's generally in the early days of utilizing credit that a lot of people screw up and end up messing up their credit for years to come. Here are a few suggestions which will enable you to allow you to stay out of trouble and build your credit.
Your credit score plays a big role. Not just for obtaining loans or credit cards. But many insurance agencies use it when they give you an insurance quote. And employers use it to make decisions on employment and to obtain security clearances. Imagine you just spent 4 years in college. Worked hard, obtained your degree. But no one in your field will hire you because you have a low credit score. Or no credit score. A lot of people think credit score and the person’s integrity go hand in hand. That’s not always true. Things like poor health, divorce, or unexpected accidents can kill a credit score and the consumer can try to make the payments but when you have medical bills totaling Tens of thousands of dollars. You have no choice but to make the hard decision to declare bankruptcy.
Once that happens, it’s not the end of the world, although it feels like it. Here are a few methods to get you started, or to get you back on your feet!
1. Apply for a secured credit card. These are often called guaranteed approval credit cards. They are tied to a security deposit that you make which will also double as your credit limit. With on time payments these secured credit cards will become unsecured. When choosing a card, make sure you choose one that reports to the credit bureaus monthly.
2. Ask a parent, friend, husband or wife to allow you to be a signer on one of their credit cards. Their good credit will become yours too! That card with its long history will begin to report on your credit bureau too.
3. Gas cards tend to have lower credit requirements. Apply for the card at your local gas station. Use it and of course make sure you make all your payments on time!
4. Store cards. These can also be easy to get approved for IF they are not backed by one of the major banks. If the approval process means applying to a bank like Chase or Citibank and you have bad credit, you are wasting your time.
You will be declined. But if you have no credit, you have a slim chance of approval. But they will only approve you for a very small amount. I've seen some cards with $200 credit limits! Well its better than a decline, but to improve your chances of approval and to get a better credit limit. Ask a friend of family member to co-sign for you.
5. Another form of guaranteed approval credit cards is prepaid debit cards. They can carry the Visa, MasterCard and even American express logo. These are DEBIT cards, not credit cards, so often times the issuers don't pull credit. The type of prepaid debit card you want will have a "credit builder" program that is offered for a monthly fee. For that fee the debit card company will report your payments on your credit report.
Its imperative that everyone you apply to credit MUST report to 1 or all 3 of the major credit bureaus (Experian, Trans Union and Equifax) Some of these services will automatically submit your payment history to the bureaus while some of them will require that you join their "credit builder program" and pay a month fee for them to do so.
Make it a habit to pay all your bills on time and if possible, pay them off in full
In case you find that you just cannot make a payment, contact the lender as soon as possible and describe to them what the issue is. They'll most likely work out something with you and they might not report the late payment to the reporting services if you're able to get the payment in immediately.
Building credit can take some time. But thanks to sites like CreditCreators.com, it can be done quickly and easily! Follow the tips and tricks on this site to build or rebuild a strong credit score.
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